on the World Today

FEW travelers to Japan realize they are visiting three different but related countries. In the rice paddies farmers use methods of hand labor which date back to primitive times; in the small shops and cottage industries there are medieval-feudal patterns of manufacture and distribution, and even semi-feudal social relationships; in the large factories labor unions are strong, and there are faint beginnings of automation and of an economy of abundance.

On the farms almost half of Japan’s population reaches old age in the middle forties, and children are valued if only to take care of the prematurely aged. Indeed, in certain areas, large numbers of children are necessary if the family is to survive. Thanks to agricultural reforms, tenant farmers are now only a small minority, and democratic coöperative organizations have spread through the land.

Well-informed Japanese call the agricultural cooperatives one of the best of the occupation reforms and say that the Japanese bosses who at first dominated the coöperatives have gradually been replaced. Nevertheless American movie-makers recently found that to rent a Japanese farm, theoretically belonging to its farmer-owner, they had to consult a Nipponese Capone.

The small shops and cottage industries produce the handicrafts — pottery, lacquerware, silk, and damascene — for which Japan is famous. They also produce all sorts of industrial products on a subcontract system, with some attempt at standardization, and with a remarkable ability to shift rapidly from one temporarily successful export to another. Here one can see at its most fascinating the Japanese social system of paternalism, or substitute father, substitute child, as the Japanese sociologists call it. One does not fire an inefficient father or an incapable son, but one does not need to pay him very much either.

On the farms the working day is ten hours except at the time of planting or harvest; and the pay is often as low as $10 a month. Wages in the large industries are the best in Japan, about $55 a month. Usually the working day is eight hours, and the productivity of these workers is far greater than that of workers in smaller industries.

Too many People

The population of Japan is steadily increasing. In a country roughly the size of California (which has about 13 million inhabitants) there are close to 90 million, and each year a million and a half new Japanese appear on the crowded scene.

Japan is one of two countries in the world (India is the other) in which systematic private and public efforts are being made to spread knowledge of birth control. Meanwhile abortion is widely used, and one estimate has it that there are each year as many abortions as births. About 80 per cent of these abortions are performed for what the statisticians call economic reasons. And in the country districts some women have themselves sterilized. In the long run, through such measures the Japanese will adjust their population to a more manageable level.

The immediate question is what to do about the young employables who are already born and who for at least fifteen years will threaten the Japanese economy with chaos. The examples of Belgium and the Netherlands, both more densely populated than Japan, suggest that an answer can be found. Those who advocate emigration are fond of citing the fact that only 16 per cent of Japan’s land is usable. But in this respect Japan is better off than North America, and far better off than the world as a whole. More can be done to reclaim land from the sea and, as one experiment has shown, to use land above 1200 feet in altitude.

New jobs for new workers?

If Japanese productivity continues to increase at its present rate, there will be new jobs each year for perhaps 320,000 new workers. That leaves a balance each year of close to 400,000 young workers for whom new jobs must be found, for at least a decade. The only answer now in sight is a still further increase in productivity.

Productivity in Japan, however measured, is certainly above the pre-war years—perhaps as much as 150 per cent of that, period — a remarkable achievement when one remembers that Japan lost 40 per cent of its national wealth and 45 per cent of its territory in the Second World War. Exports for fiscal 1955 increased in value to $2 billion (23 per cent more than in 1954), and the balance over imports was about $500 million in the black. The fact remains that Japan must import about 80 per cent of its raw materials; and while imports have reached the pre-war level, exports are still only about half what they were in those halcyon days.

The Japanese, who in their internal affairs show a marked distaste for competition, are facing for the first time on a large scale the necessity for reaching a competitive position in international trade. Some Asian nations are reaching self-sufficiency in the light industrial goods Japan exported before the war; and others, such as Red China, are beginning to undersell the Japanese in exports of cloth, a Japanese world specialty. In heavy industrial goods and chemicals, Japan is a less efficient producer than the United Kingdom, West Germany, or the United States.

Indeed, Japanese exports to Asia have decreased by about 20 per cent, compared with the pre-war figure. In a recent case of bids to sell heavy industrial goods to India, the Japanese figure was 10 or 15 per cent higher than those of other bidders. One estimate of Japanese productivity is that it is 20 or 30 per cent less than it might be, even with present Japanese resources. And it is in Japan’s new field of heavy industries that productivity is the most significant factor.

The fear of competition

Japan’s great pool of cheap and surplus labor is a disadvantage, rather than an advantage, for it leads to a lack of interest in efficiency. And Japanese workers in the largest labor union. Sohyo, have even opposed productivity. In all walks of Japanese society, raises in pay are awarded mainly according to seniority rather than merit; and generally speaking, it is more important to age than to think.

The unions object, for the most part, to time and motion studies, or even to aptitude testing for jobs. The main concern of a worker is keeping his job. A Japanese worker who seeks to better himself by transferring from one company to another is immediately suspect as disloyal. A worker expects his employer, or substitute father, to take care of him for life, and hiring a worker is closer to adoption of a child than to fitting the right worker to the right job.

Japanese industry is also weak in marketing practices, both in finding out whether there is any consumer demand for a given product, and in selling the product once it has been manufactured. Aside from neon lighting, advertising balloons, and a few sandwich men equipped with drums, umbrellas, and clackers, there is little salesmanship. A salesman is ranked with a factory worker in prestige.

Another weakness of Japanese industry, particularly the smaller industries, is the lack of adequate costaccounting procedures. Often a company assigns an arbitrary price for its product and hopes for the best. Some companies will keep as many as three sets of books: one for themselves, one for their investors, and one for the government.

Capital equipment is not used as thoroughly as it might be, partly because Japanese management seems to be at times unaware that machinery represents a capital investment. Japanese businesses pay high interest rates for their capital, sometimes as high as 30 per cent in actual rates. Because so many managers own stocks, and stock dividends are taxed at a lower rate than ordinary income, plants pay out far too much of the plant income in dividends, even when the company is obviously going broke as a result.

At the same time, Japanese business leaders, in spite of the need for capital in Japan, are doing everything they can to delay the moment when foreigners can invest in Japanese industries. The reason given is fear of foreign domination of Japanese business. The actual reason seems more probably to be fear of pressure from foreign investors to reorganize Japanese management or practices.

A last disturbing weakness of Japanese industry is the failure to provide significant funds for research, other than immediately usable or developmental research. The amount now spent is approximately one third that of West Germany, one tenth that of the United Kingdom, and one fiftieth that of the United States. Japan will almost surely fall behind in the artificial fabrics industry, because of lack of research.

A top Japanese executive does not make much actual money by Western standards — perhaps $8000 before taxes—but he enjoys many extras, ranging from a free house to a car and chauffeur and maid service, and even, in small, old-fashioned firms, a geisha or business wife in addition to the more usual variety. Foreign observers are often very unfavorably impressed with Japanese managers. The question is whether now, as the managers try to restore the old non-competitive cartel system, they will lose the battle for survival of Japan as one of the free nations of Asia.

Low standards in the colleges

The managerial group and most of the ruling class in Japan come from the College graduates, and probably the final answer to the issue of productivity is a matter of pedagogy. The Japanese themselves, especially those who have traveled abroad, now often comment on the lack of emphasis on logic in both Japanese business and Japanese education. The quickest way to paralyze a classroom of Japanese students is to ask a question stressing reasoning.

Also discouraging in Japanese higher education is the practice of passing more or less automatically every student who succeeds in the rather strict college entrance examinations. Often Japanese higher education consists of slowly forgetting what was learned in the generally excellent high schools, so that the best students are the freshmen and sophomores, and the worst the juniors and seniors. The best students do excellent work. But the average students, though far more rigorously selected than students in America, can drift through their four years with very little intellectual discipline.

Yet it is to this group — badly trained through no fault of their own — that Japan must look for the ideas which will lead to greater productivity and employment.

Cultural interchange

Japanese scholars and businessmen are now traveling abroad at a rate far greater than in the early days of the Meiji era, when Japan first made its effort to draw level with the Western world. Thanks to the Fulbright program, and similar but much smaller British, German, and French programs, foreign experts of all kinds are visiting Japan as never before in its history.

The most remarkable, and as yet little noticed, effort at cultural interchange is that represented by the still new Japan Productivity Center. Its efforts are being aided by an able and energetic group of Americans in the United States Overseas Operations Mission. These two agencies make it possible for teams of Japanese, usually twelve in number, from industries chosen with an eye to the long-range future of Japan, to visit the United States for six weeks of study. This program has only just begun, but its final effects may reach every circle of Japanese society. Badly needed in Japan is a business and industrial college which, free from tradition, could approach Japan’s industrial productivity in a Japanese way. Such a college, properly run, could serve as an inspiration for Japanese education in general.

A period of far-reaching re-education lies ahead for the industrial and business world of Japan. For the Japanese cannot continue to expect to increase annual exports to America by 62 per cent as they did last year (the average increase in exports to other countries was 15 per cent) without making concessions in return. An example is the marked increase in exports of Japanese sewing machines to America — 100 per cent in one recent month — while at the same time the Japanese vigorously deny American sewing machine companies an entry to the Japanese market. The Japanese want the benefits of the American competitive system without the costs of competition.

It is not likely that the Japanese can make further improvements in Japanese industrial production without introducing industrial democracy and a more truly competitive pattern of life. In the long run, historians may be able to record that even more significant and lasting than the democratic. influences of the occupation were the new democratic forces in Japanese business and education which appeared after the occupation was over.